Investors see opportunity in Dynegy

Patterson-UTI, Entergy also stand out in energy group

LisaSanders

NEW YORK (CBS.MW) -- Dynegy's stock was the top mover in the energy sector Tuesday as geopolitical concerns sent most bulls to the sidelines in the broader market.

At Tuesday's close, the Dow Jones Industrial Average
INDU
plunged some 96 points on earnings warnings and amid concerns about a war with Iraq and general fears about terrorism. See Market Snapshot.

Unlike stocks, commodities futures recorded gains on the New York Mercantile Exchange.

The benchmark March crude contract rose by 82 cents to settle at $33.58 a barrel, while natural gas for March delivery shed 0.4 cent to settle at $5.762 per million British thermal units. See Futures Movers.

Meanwhile, Dynegy
DYN
added 7.3 percent to close at $1.77 on volume of 11.4 million shares - second only to ExxonMobil in terms of trading action in the energy sector.

Investors sent Dynegy's stock into a spin on Friday after the power generator reported a fourth-quarter loss of $432 million, or $1.15 a share, wider than the prior year's loss of $9 million, or 3 cents a share, including preferred stock dividends. See more.

Shares of Williams Cos.
WMB
added 8 percent to close at $3.25. The company said Tuesday it has sold a power facility in Indiana to Hoosier Energy and terminated a contract to manage Hoosier's load and power supply for $67 million in cash. Williams said it would record a pre-tax loss of $45 million in the fourth quarter to account for the sale of the facility.

In other news, El Paso Corp.
EP
was off 2 cents to close at $8. The pipeline operator said El Paso Field Services, an El Paso subsidiary, sold 18 natural gas gathering systems to Western Gas Resources
WGR
for $37 million. Western Gas added 1 percent to close at $34.60.

And CMS Energy
CMS
continued on a two-day skid, prompted by its sale of a one-third stake in Centennial Pipeline to Marathon Ashland LLC and TE Products Pipeline Co. LP for $40 million. Shares fell 14.3 percent to close at $4.79.

Elsewhere, utility stocks were almost uniformly lower with the exception of Entergy
ETR

Before the bell, the New Orleans-based utility reported a fourth-quarter profit per share that was ahead of expectations and close to double what it earned in the year-ago quarter. Entergy's shares eked out a fractional gain to close at $46.

Entergy said it earned $75.8 million, or 33 cents a share, vs. $20.7 million, or 9 cents a share, in the fourth quarter of 2001. From operations, the company posted a profit of $77.4 million, or 34 cents a share, vs. $39.8 million, or 18 cents a share, a year ago. Analysts polled by Thomson First Call expected Entergy to earn 26 cents a share, on average. The company cited strength in its competitive businesses as the reason for the 89 percent jump in ongoing earnings.

The Philadelphia Utility Index
UTY
shed 1.3 percent to close at 246.80.

In the oil service sector, Patterson-UTI Energy
PTEN
led its peers after reporting fourth-quarter earnings of $1.8 million, or 2 cents a share.

While this was down from 24 cents a share earned in the year-earlier period, the company's latest profit came in a penny ahead of the average analyst estimate as compiled by Thomson First Call. Revenue fell 19 percent to $140.9 million, versus analyst expectations of $143 million.

Patterson-UTI's stock was up 6.5 percent at the close to finish at $32.50.

Elsewhere, Weatherford International
WFT
rose by 5.2 percent to close at $38.18.

Late Monday, the company reported a sharp drop in fourth-quarter profit from the prior year as a result of significant declines in drilling activity in the U.S., Venezuela, Kazakhstan and the U.K. sector of the North Sea.

Weatherford reported net income of $31.5 million, or 25 cents a share, down from a profit of $54.5 million, or 44 cents a share, in the fourth quarter of 2001. Analysts were expecting Weatherford to earn 26 cents a share, on average.

EOG reported fourth-quarter net income of $41.7 million, or 36 cents a share, compared to a net loss of $27.6 million, or 24 cents a share, in the fourth quarter of 2001.

But excluding items, EOG earned 33 cents a share. Analysts were expecting EOG to earn 34 cents a share, on average. See more in Energy Watch.

The company also said it was able to replace 193 percent of production at a finding cost of $1.06 per thousand cubic feet equivalent and added it expects to increase natural gas production in North America this year.

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